Engaging employees. Recruiting the best talent. Retaining institutional knowledge. Planning for mass retirements. These topics are on the minds of human resources professionals across the globe. So what is the key to winning the talent war? An internal career development program.
Randstad US conducted the Employer Branding Survey in 2015, which showed that the top reason why employees leave jobs is “lack of a career path.” The study revealed that employees who had left their jobs in the past year cited a lack of career development opportunities (26 percent) as the prime reason for leaving their organizations. Companies, then, can promote their training and development initiatives as a way to recruit and retain talent.
The Association for Talent Development (ATD) published a State of the Industry Report in 2014, which showed that organizations with fewer than 500 employees spend a little over $1,200 per person on internal career development programs. Organizations with over 500 employees are likely to spend over $1,800 per person.
Before you say but it will cost too much, consider the cost of not providing employee development benefits. Although the recession of 2008-2009 brought an employer’s (or buyer’s) market, it has turned now into a job seeker’s (or seller’s) market. In 2017, and going forward into the next several years at least, it is likely to continue to be a seller’s market, meaning that the job seekers will be selective and discriminating in their acceptance of job offers. They will be seeking positions that not only pay well, but also that offer excellent benefits, including training and development.
In 2012, Deloitte Consulting surveyed 560 employees across every job function and type of organization, and established the following:
• Employees who planned to change companies cited a lack of career progression as the top factor, over compensation.
• Employees are more likely to stay with their organization if their skills are being used effectively and they feel challenged by the work.
• Employees who are part of a succession plan or who work for an organization that promotes from within are less likely to leave.
• Beyond succession planning, companies should focus specific retention strategies on high-potential employees to ensure their talents are being used to the fullest extent.
• Employees who have been with their companies for fewer than two years or who are Millennials are more likely to leave than older employees who have been with the organization longer.
• Organizations should specifically tailor their strategies for engaging, developing, and retaining employees to the four generations in the workplace.
For the last ten years, HR professionals have focused on employee engagement as one of the key issues they face. In the Randstad study mentioned above, it was found that although CEOs realize the value of employee development, they do not allocate appropriate resources for this purpose. If your organization truly aims to engage current employees and recruit top talent, you need to convince your C-suite of the value of this critical employee benefit. To do this, you will need to bring to your organization’s leaders data about cost to replace—which, according to the Bliss-Gately tool, is 1.5 times the position’s salary. So, if you hire someone who earns $50,000, and that person leaves after three years, you will spend $75,000 to refill that role, when you include the cost and time to recruit and train someone else. Given that fact, don’t you think your CEO would say that using employee career development programs internally to recruit great talent and retain those workers is well worth the investment?
Now you may be asking yourself how your organization can create and implement an internal career development and succession program that will allow you to recruit top talent, engage your employees, retain staff, and therefore lower turnover. I was hired to do just that by a former employer, so I will share with you the elements of such a program.
The first task I undertook was to review and update all job descriptions in the organization. Rather than simply have employees review their current descriptions and acknowledge that it represented their work, my team and I instead had them consider not only their day-to-day duties, but also the competencies and soft skills associated with their jobs. We asked them to consider whether the job should require a certain level of education or training, and what skills were needed to be successful. We used a competency tool to aid them in determining the most critical competencies needed for the job. This proved especially important for those at the director level and above, where a higher level of emotional intelligence and soft skills are vital. I worked with staff at all levels of the organization, performing job analyses to ensure that the job descriptions were as accurate as possible. The reason for undertaking this as the first step will become apparent shortly.
After the job analyses were completed, we made them available to employees so they could consider whether they might be interested in a different role in the organization. Our CEO was quite forward-thinking and realized that the key to low turnover was keeping employees engaged and challenged to do more and advance themselves while also advancing the mission of the organization. One key area he felt should be addressed was internal promotional opportunities. The CEO encouraged the organizational leaders to promote from within for succession purposes, but that was not happening as often as he would have liked. He tasked me with investigating the reasons why.
I researched the positions that had been filled over the last six months and interviewed the hiring managers. I expected to find that internal employees did not have the work experience needed to secure an internal promotion. Instead, I found that employees were not preparing for interviews because they assumed that if the organization valued internal promotion, they didn’t have to put forth the same level of effort as an external candidate. Many of the employees had been in their jobs for years and had not been on interviews for some time. Therefore, our employees were providing outdated resumes, dressing too casually for the interview, arriving unprepared to answer interview questions, and learning little about the position they sought.
One of the next initiatives for our newly launched employee development program was to educate our internal candidates on the interview process. We held several one-day seminars for staff on resume writing, dressing for the interview, researching the position and department, crafting responses to behavioral interview questions, and following up with thank you notes to the hiring manager. Following that training, we saw the number of internal promotions rise. Hiring managers were very pleased with the quality of internal candidates who were now able to compete.
At the same time that we were holding these programs to teach employees how to obtain a promotion, we developed a year-long leadership development program. Our first group of employees to go through the program were current supervisors. Even the chief officers participated in order to show other leaders the significance of attending. This year-long, once-a-month program consisted of day or half-day sessions on topics such as performance management, coaching, supervisory skills, employment law, diversity, team building, and more. Once the current supervisory staff had completed the program, we opened it up for a second round to employees who aspired to be in such a position in the future. This allowed us to develop potential leaders from within and ensure their readiness to take on additional responsibilities. We trained employees in exactly what we wanted them to know, rather than leave it to them to find their own developmental opportunities.
I met with each person to create a personalized plan for their development. Employees had the option to have two plans – one to share with their supervisor and one that would be kept confidential. The reason for this? Some employees did not want their supervisors to know that they might be considering a new role or a different department. Although the CEO strongly encouraged supervisors to coach employees to grow and develop, some staff members were uncomfortable sharing their goals of leaving their current position. In those cases, I worked with employees to create one Individual Development Plan (IDP) to set goals for their current role that could be shared with their supervisors, and another IDP where I would work with them on development opportunities to prepare them for their next position.
Since all the job descriptions were up to date and available for review, employees could learn what skills, education, and competencies were needed to successfully transition internally. Once an employee had determined which jobs he was interested in pursuing, we could create an IDP to prepare him for the role. For example, if the potential future job required a degree, but the employee had not yet finished college, the IDP would reflect the employee’s need and desire to finish school. In that case, I would assist him with applying to college, selecting courses, and securing tuition reimbursement. Knowing that the organization was investing in his future would ensure that the employee would most likely be engaged and retained for the long term.
The next stage of the internal employee development program was to establish a succession plan. The chief officers determined that because they encouraged internal promotion, a formal succession plan would create a career path that would not only prepare employees for future roles, but would also retain the best talent, as staff members knew that the organization was investing in their career progression.
As mentioned earlier, the job descriptions had been updated to include competencies, so this accelerated the process of developing a succession plan. Rather than have the organizational leaders hand select those who would participate in the succession plan, we allowed employees to opt in if they were interested in being considered for future positions. We wanted to be transparent and allow all employees to feel empowered to participate.
For employees who wanted to prepare for a specific position in the C-suite, the chief officers worked directly with those staff members to mentor them, answer questions, and determine the readiness of those in the pipeline. To do this, we used assessment centers to observe the candidates in a variety of situations. Small groups of employees who were preparing for eventual c-suite positions were provided with real-life scenarios of incidents and events which occurred or could potentially occur in the roles they were seeking, or other activities they would be expected to perform in a higher-level role. Examples of this included presenting at conferences, speaking to the media, and completing special projects. This would enable the c-suite to observe those in the line of succession in behavioral situations using the necessary competencies.
Another advantage that follows from succession planning is the transfer of institutional knowledge. With the coming mass retirements of baby boomers in your workforce, this is an issue you will undoubtedly face. When employees retire, they take with them not only the work they performed on a daily basis, but also the knowledge, competencies, and connections they made on the job.
As you can see, there are a variety of methods to develop employees in meaningful ways that don’t cost as much as you might guess. Our employees knew we valued them because we showed it through numerous activities. Our turnover rate was around one percent, and even when employees left, some of them returned within a year.
As human resources professionals, we spend a majority of our time dealing with daily issues as they occur, rather than planning for the future of our organizations. We need to make time for the engagement and development of our employees. Consider hiring a staff member whose sole role is to make your workplace one of recognition, engagement, and personal and professional development. You will need to convince your C-suite of the value of this position, but I assure you that an extra FTE in HR will, in the long term, save you possibly millions of dollars in turnover and disengaged employees.
Shelly Trent is a career coach, writer, speaker, and educator. She serves as an adjunct faculty member at Indiana University Southeast’s School of Business, where she teaches business students about career planning and job search. She worked for SHRM for over 16 years as a field services director.